Here's how you can profit from a takeover of Ten Network Holdings Limited

Don't bet on a quick profit from Ten Network Holdings Limited (ASX:TEN).

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Ten Network Holdings Limited (ASX: TEN) is going to be bought sooner or later. US media and private equity groups Discovery, Anchorage Capital, and Haim Saban's Saban Capital are eyeing Australia's third-largest broadcaster with the support of rival Foxtel.

Ten's share price is currently floating around the 20 cent mark following media reports that Discovery and Foxtel were preparing a joint bid valued at 23 cents per share. The problem for small shareholders is that Bruce Gordon, who owns nearly 15% of the company, and Lazard Asset Management, which owns 6%, plan to oppose the deal on the grounds that the US companies would not be able to add any value.

Ready for Profits?

I strongly believe that Ten is a diminishing force, the Fairfax Media Limited (ASX: FXJ) of television, which appears to be in a sustained and painful decent towards minimal market share and tough trading times.

Speculators will be picking up Ten stock on the hope that they can cash out when a concrete bid comes through, however this isn't a particularly intelligent way to invest – just look at the share price of Graincorp Ltd (ASX: GNC) for an example of what can happen when a takeover offer falls through.

Here's how you can profit

Motley Fool contributor Andrew Mudie does not own shares in any companies mentioned. You can find Andrew on Twitter @andrewmudie

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